The decision to file bankruptcy
is never made lightly. Most
debtors struggle with the
decision for months trying to
avoid bankruptcy, frequently
getting themselves even deeper
into debt trying to juggle
financial obligations. Due in
large part to the recent
recession, the number of bankruptcy filings have hit record highs in the
United States. If you are one of the millions of people across the country
who has made the difficult decision to file for bankruptcy, you are likely
apprehensive about the process itself and unsure what to expect. Although
every bankruptcy petition is unique, there are some basic steps that most
debtors go through during the bankruptcy process. Understanding the
process better before you get started may ease some of your
apprehension.

MAKING THE DECISION
You may have already considered all of the pros and cons to filing
bankruptcy as well as considered the alternatives; however, if you haven’t
made a decision yet there are factors that you may wish to take into
account before making a decision. Typically, if you are in enough financial
trouble to consider bankruptcy then your credit rating is likely already
suffering. If, however, you have managed to maintain a decent credit score
then the effect a bankruptcy will have on your score is a valid
consideration. Typically, your credit rating will drop when you file for
bankruptcy if your file a chapter 7. How much it drops will depend on many
factors. The good news is that your credit rating may start to rebound as
soon as the bankruptcy is discharged in the case of a chapter 7
bankruptcy. A chapter 13 bankruptcy filing may negatively impact your

credit rating but it will not typically have the same impact as a chapter 7
filing because a chapter 13
calls for you to repay your
debts.
You may also wish to
consider what type of debt
you need to bankrupt.
Some debts, such as
student loans and child
support, cannot be
discharged through a
bankruptcy. Be sure that
your debts can be discharged before making the decision to file for
bankruptcy.

CHOOSING AN ATTORNEY
Once the decision has been made to pursue bankruptcy the next step
should be to choose an attorney. Technically, there is no legal requirement
that a debtor be represented by an attorney when filing for bankruptcy;
however, given the complexity of the subject matter, the importance of the
outcome, and the sheer volume of paperwork involved it is a wise decision
to retain the services of an experienced bankruptcy attorney.

CHOOSING A CHAPTER
The US bankruptcy code is divided into chapters. It is for this reason that
we refer to the type of bankruptcy that someone files as a "chapter 7" or
"chapter 13". There are four different chapters under which an individual
debtor may file for bankruptcy-chapters 7, 11, 12, and 13. Although
available to an individual, a Chapter 11 is typically used by small
businesses. A chapter 12 bankruptcy is for family farmers and fishermen.
That leaves chapters 7 and 13. A chapter 7 bankruptcy is known as a

"liquidation" because a debtor’s nonexempt assets are sold by the trustee
to provide liquid assets with which to repay creditors. A chapter 7
bankruptcy requires a debtor to pass a "means test". In short, the means
test compares your income to that of other similar households in Ohio. If
your income is at or below the median income for similar households then
you may file a chapter 7 bankruptcy. At the end of the chapter 7
bankruptcy the majority of your debts will be discharged, or forgiven.
A chapter 13 bankruptcy is typically used by debtors with above average
income and/or who have valuable assets that they wish to retain. In a
chapter 13 bankruptcy you will be required to create a repayment plan that
will allow you to repay the majority of your debts over an extended period
of time-usually three to five years.

GATHERING DOCUMENTS
There are a number of documents and records that you will need to put
together in order for your attorney to prepare the bankruptcy petition and
all of the required schedules. While the required documents will vary from
one debtor to another some common documents and records include:
Income tax returns
Pay stubs or 1099s
Deeds and titles
Loan documents
Creditor names and addresses

TAKING THE CLASS
Before you are allowed to file your bankruptcy petition you must complete
a credit counseling class. There are several ways that you may complete
the class including an online option. There is a small fee required for the
class. You must provide proof of completion along with your bankruptcy
petition. You are also required to complete a debtor education class which

must be taken after you file but before the bankruptcy is discharged. The
options for completing this class are typically the same as the credit
counseling class.

FILING THE PETITION
When you have completed the class and gathered the required documents
you will meet with your attorney to begin preparation of the petition. The
petition essentially just asks the court to grant you relief from your debts
pursuant to the US bankruptcy code. There are number of schedules that
must also be prepared and attached to the petition. These schedules
include things such as creditor information, income information, and asset
information. Once the petition and schedules are ready you will sign them
and they will be filed with the appropriate U.S. Bankruptcy Court. As soon
as the petition is filed the court will grant an automatic stay. The automatic
stay is a court order
that prohibits
creditors from
attempting to collect
on a debt. This
includes all debtors
and all debts. Every
creditor listed on your
schedule of creditors
will be notified of the
automatic stay.

341 HEARING
In both a chapter 7 and chapter 13 bankruptcy you will be required to
attend a "341 hearing". Named for a section of the bankruptcy code, the
341 hearing is also referred to as the meeting of creditors. The meeting is
typically held in either an informal office located in the federal courthouse

or at the trustee's own private office. It will not take place in open court at
any rate. In fact, if you file a chapter 7 bankruptcy you will typically never
set foot in a courtroom. The purpose of the meeting of creditors is to allow
creditors to examine you under oath regarding your income, debts, and
assets. In a chapter 7 bankruptcy it is not uncommon for none of the
creditors to appear at the meeting of creditors. In a chapter 13 bankruptcy
there is a higher likelihood that creditors will appear for the 341 hearing,
particularly if you have secured debt included in your bankruptcy. You and
your attorney will prepare ahead of time for the meeting; however, the
questions are usually simple enough to answer as they usually relate to
information that has already been included in your bankruptcy.

REAFFIRMING SECURED DEBTS
Some debts are secured by collateral, such as a mortgage loan or a car
loan. In a chapter 7 bankruptcy you will need to decide what you plan to
do about any secured debts. If you decide that you wish to keep the asset
used as collateral than you will need to reaffirm the loan. Essentially, this
means that you'll execute a document known as a reaffirmation agreement
which states that you plan to continue making the payments on the original
loan. This protects your collateral but also means that you will still be
legally responsible for paying the debt after your bankruptcy is discharged.

RE-PAYMENT PLAN (CHAPTER 13)
If you filed a chapter to the bankruptcy your actual involvement in the
bankruptcy process is complete at this point in time as a general rule. If
you filed a chapter 13 bankruptcy you will need to prepare a repayment
plan at this point. This involves determining what your monthly income is
as well as necessary expenditures such as housing, food, and utilities. You
will then determine how much money you have each month available to
repay creditors. Each creditor will then receive a percentage of that money
based on the amount you owe that creditor and what priority the creditor

has in the bankruptcy. When the repayment plan has been approved you
will send one monthly payment to your trustee each month whe will then
distribute the funds among your creditors.

RE-PAYMENT CONFIRMATION HEARING
After your repayment plan has been created by you and your attorney you
will submit it to the bankruptcy court. The court will then set a confirmation
hearing date. On that date you and your attorney will appear in court to
review your repayment plan. Once the judge is satisfied that your
repayment plan is acceptable the judge will officially approve the plan at
which point you will begin making your monthly payments to the trustee.
If you file a chapter 7 bankruptcy your bankruptcy is typically discharged
about 60 days after the meeting of creditors. Typically, the entire chapter 7
process only takes about four months. When your bankruptcy is officially
discharged all of your debts (except those that are non-dischargeable) are
forgiven, meaning you are no longer legally obligated to pay them. If you
file a chapter 13 bankruptcy the case will remain open during the length of
your repayment plan-typically three to five years. At the end of your
repayment plan any remaining debts that are eligible are usually
discharged, or forgiven.
Now that you have a general understanding of the steps involved in the
bankruptcy process it should ease some of the apprehension you had
about the process.

Every associate at The Needleman Law Office is committed to handling
your case in both a personal fashion and in a professional manner. In other
words, we treat you the way we would want to be treated. We will take a
personal interest in your situation, making sure you understand exactly
what is happening and what options you may have. Then we’ll fight to
ensure the best possible outcome for your situation.